Wheeling May Lose $250,000 Of Lottery Cut

January 31, 2014

WHEELING - Proposed legislation that would stem the flow of proceeds from legalized gambling to cities and counties in West Virginia could cost Wheeling $250,000 per year, according to city officials.

Gov. Earl Ray Tomblin proposed the measure to cut lottery revenue appropriations as a way to save about $39 million each of the next three years - and $19 million each year thereafter - as the state looks to fill a $146 million hole in its general fund budget. Similar versions of the bill have been introduced in both chambers of the Legislature.

The proposal would slash a required deposit of gambling revenue in the state Infrastructure Fund from $40 million to $20 million for the next three fiscal years, and also would permanently reduce various other statutorily required distributions of lottery revenue by 15 percent.

These include contributions to various purse and breeder's funds that subsidize the state's dog and thoroughbred racing industries - but also payouts to cities and counties that rely on the money to balance their budgets.

Some state officials believe local governments have essentially been playing with house money under the current distribution structure, and argue it's time for them to share the burden of lean times with state agencies that have absorbed back-to-back 7.5-percent budget cuts.

Wheeling leaders such as City Manager Robert Herron and Mayor Andy McKenzie don't see it that way, however.

"The impact to our budget would be devastating. ... Essential city services and critical infrastructure projects would suffer, while the reduction of pension liabilities would slow dramatically, as well," Herron said.

In Wheeling, the current budget year has been tighter than usual, as the city saw its end-of-year cash carryover plummet from about $1 million at the end of the 2011-12 fiscal year to roughly $250,000 at the close of the 2012-13 budget cycle - the same amount the city expects to lose if the governor's bill becomes law.

And since 2000, lottery revenue has enabled Wheeling to take a sizable chunk out of unfunded liabilities in its police and fire pension funds.

In that time, assets in the fire and police plans have soared from 10 percent and 7 percent of full funding, respectively, to 32 percent and 42 percent as of Dec. 31.

The cut in gambling proceeds would obstruct that progress, officials said.

As a former state senator, McKenzie understands the challenges legislators face in balancing the state's budget. But he pointed out that local governments have far fewer avenues available to generate revenue than the state, even as West Virginia moves to grant its communities more authority over taxes, fees and licensing through home rule.

"I would encourage our legislators and governor to look at other ways to cut the size of government and reduce spending, instead of taking our dollars," McKenzie said.